Transcript

Transcript of IMF Press Briefing

November 21, 2024

Speaker
Ms. Julie Kozack, Director of the Communications Department, IMF

MS. KOZACK: Good morning, everyone. It's great to see you all here in person and online. Welcome to this IMF press briefing. My name is Julie Kozack. I'm the Director of Communications at the IMF. As usual, this briefing is embargoed until 11:00am Eastern Time in the United States. I will start with a few announcements and then we'll turn to your questions in person on Webex and via the Press Center.

First, I'll start with the travel for the Managing Director. On December 3rd, the managing director, Kristalina Georgieva, will attend the 2024 High Level Caribbean Forum on Managing the Green Transition in Barbados. Deputy Managing Director Nigel Clarke will travel to Nairobi, Kenya, on December 9th and 10th as part of our ongoing engagements with Kenya. During his visit, DMD Clarke will meet with the authorities and other key stakeholders, and we'll provide more updates on this trip as they become available. And with that, I will now open the floor to your questions. For those connecting virtually, please do turn on both your camera and microphone when speaking. And now to the room. All right, Kyle, let's start with you.

QUESTIONER: Hi, good morning. Thank you for taking my question on Egypt and the Managing Director's recent visits. Does the IMF have any concerns that his reforms could lead to potential civil unrest in Egypt? And was such a possibility discussed during the Managing Director's visit there? Thank you.

MS. KOZACK: All right, I suspect we may have other questions on Egypt. Any other questions in the room on Egypt?

QUESTIONER Yeah, we were just wondering whether or not. We were just wondering whether or not, given the recent mission to Egypt, whether or not Egypt has requested a larger amount under the RSF? I think there was some talk that it would be up to $2 billion. Thank you.

MS. KOZACK: Anyone online wants to come in on Egypt? I do have a question that came in through the Press Center. And the question is, as the IMF mission to Egypt concluded its fortnight visit to the country for the fourth review of the EFF program, what can we expect going forward in light of Ms. Hollar's statement on the visit? All right, so I think that's it on Egypt. So, as you know, the Managing Director had a very constructive visit to Egypt, which underscored the IMF support for Egypt's resilience and reform efforts to maintain economic stability.

But at the same time, there are, as you know, a lot of tension in the region. The economic outlook for Egypt therefore does remain challenging and the authorities have taken key reforms, they've implemented key reforms to preserve macroeconomic stability. Given these challenges, in March of 2024, just six or so months ago, the IMF increased its support for Egypt by raising the loan amount from $3 billion to $8 billion US dollars. We also recently undertook a reform to our surcharge policy and that is saving Egypt $800 million over the next six years under this new policy.

And of course, the team is also engaged in discussions under the RSF, and those discussions are ongoing. So, we don't have more information on the potential size at the moment. Yesterday the team issued a press release at the end of the staff visit for the fourth review mission discussions also covered the Article IV consultation. Discussions are continuing virtually to finalize agreement on the policies and reforms that could support completion of the fourth review. And just now turning to, what are those priority reforms? First, sustaining a flexible exchange rate to shield the economy from external shocks and maintaining an appropriately tight monetary policy to help contain inflation pressures.

And of course, it will be important for Egypt to continue to maintain a strong fiscal discipline to reduce public sector debt vulnerabilities. Very importantly, enhancing private sector growth and accelerating divestment plans to speed up reforms to level the playing field and reduce the footprint of the state and the economy will be important. Raising sufficient revenue for essential programs, particularly health, education and social safety nets is also going to be critical. Reforms will also need to focus on enhancing tax equity, broadening the tax base and reducing tax exemptions rather than increasing tax rates.

And finally, strengthening the social safety nets to protect vulnerable groups from the rising cost of living, energy price hikes and other issues will be essential. I see here I have two people online who also wanted to come in on Egypt. I'm happy to take your questions but I've just given a pretty comprehensive readout on Egypt. So, let's hear the questions.

QUESTIONER: Hello Julie, good morning. Thank you for taking my question. As [the] IMF mission to Egypt concluded its visit yesterday and the first review has not yet been completed. What is the expected date for the next visit to end this fourth review? And additionally, what are the remaining reforms that need to be completed in order to finalize the fourth review? Is there potential impact of these reformers on the Egyptian economy that might require extending payment schedule, increasing the amount of the next installment or raising the total size of the current rule? How does the IMF view this situation? Thank you.

MS. KOZACK: Thank you.

QUESTIONER: The Egyptian government said that they had asked for target modifications within the program. Could you give us some details on what they asked for and what they're going to get?

MS. KOZACK: Thanks very much for the remaining questions. I don't have much more to add to what I just said. Let me just say that, you know, the discussions are continuing virtually. So, the idea is, you know, the team and the authorities are discussing now all of the issues, you know, that you have raised. The discussions will continue virtually. The idea is to try to finalize through these virtual discussions an agreement on policies and reforms that can support completion of the fourth review. And I'm going to leave it at that on Egypt. Okay, let's go back to the room, please.

QUESTIONER: would [like to] ask about Pakistan, why IMF had to review reforms agenda for Pakistan before even the first review. And what's Pakistan's IMF's take on Pakistan's falling short on first quarter revenue targets. Are there any alternative measures proposed? Have another. You may allow. I can ask the second one as well about the climate funding.

MS. KOZACK: On Pakistan?

QUESTIONER: There is a new slide on Pakistan on a climate funding that there is $1 billion to be that are in discussion and by March they can be concluded for $1 billion in climate resilience for Pakistan.

MS. KOZACK: Any other questions on Pakistan? Anyone online on Pakistan? So, stepping back On Pakistan, on September 25th, the Executive Board approved a new 37 month $7 billion EFF arrangements. The key priorities under the EFF include strengthening policymaking, building economic and climate resilience and advancing reforms to support stronger, sustained and more inclusive growth. We just -- the team was just in Pakistan and finished a mission. It was a staff visit from November 12th to 15th and the staff at the end of that visit they felt encouraged by the authorities reaffirmed commitment to the program.

With respect to the question on the RSF. So, Pakistan has indeed inquired about an RSF arrangement. This is the Resilience and Sustainability Facility. Our team and the authorities are engaged in preparatory work. But I should just mention that there's also considerable background work needed in order to complete the discussions around any potential RSF. And of course, like any program, an RSF would of course need to be considered by our Executive Board. And on the question on revenue. I think you're talking about the potential for revenue shortfalls at the end of?

QUESTIONER: Shortfalls and why IMF team had to visit before the press.

MS. KOZACK: So, on the potential for revenue shortfalls, I mean, this is something that the team will be assessing as part of the full review mission that will take place. So as the review mission takes place later on, the team will assess all of the targets under the program. Right. Including those on the fiscal side. Now, why there was a staff visit at this point, under Pakistan's EFF, the reviews are only taking place semiannually. So that's twice a year. In some cases, we have programs where reviews take place quarterly. Pakistan's. In Pakistan's case, it's semiannual. And it's very customary to have a short staff visit in between those two semiannual review missions. So, this is a standard procedure.

QUESTIONER: Julie, I'm just wondering if you can address the IMF's concerns about the new Trump administration's proposals on trade and on tax cuts. You know, 60 percent tariffs on Chinese goods can be very hard on China at a time when they're struggling 10 to 20 percent from elsewhere. And you've seen budget forecasters have suggested that his tax cut plans would run up deficits, increase deficits of, you know, eight to $10 trillion over 10 years. Just wondering what concerns you have about that. This is expected by economists to stoke inflation and to possibly put the Fed back on a path of raising rates instead of cutting rates, and we could have another trade war on our hands. So, what are your concerns about this?

MS. KOZACK: All right, thanks very much, David. So, regarding the impact of potential policies that may be implemented, it's early days and it's too early to speculate. What we will do is we will assess these policies as they are implemented. And as particularly our first deputy managing director mentioned, the exact impact of any of these policies is very much going to depend on the details. And that's why we will wait to see the details before we make our assessment.

QUESTIONER: Just a quick follow up. Are you concerned at all about the potential for some of these policies to inflationary and, you know, what could the impact be sort of more broadly? And then I have a question on Sri Lanka, if I may. I'm just wondering, given the comments from the new president in the last few days, sort of whether you can give us any update on the talks around the third review and negotiations taking place in Colombo.

MS. KOZACK: On your first question, again, you know, it's early days. I'm not going to speculate at this point, but we will do a full assessment of any policies once we know the details and once those policies are fully fleshed out. And of course, the assessment will include the full range of potential economic implications. On Sri Lanka. Let me ask if others have questions on Sri Lanka before I respond. Anyone else in the room on Sri Lanka? Eric?

QUESTIONER: Yes, thank you. I wanted to ask you about Sri Lanka, is it possible to know whether there is going there is likely to be a staff level agreement at the end of this current and ongoing mission to Colombo and if not, what more remains that needs to be completed before a staff level agreement?

MS. KOZACK: And anyone online on Sri Lanka?

QUESTIONER: Sri Lanka just voted in a new government and the IMF program is somewhat viewed akin to walking on a tight rope among the political perspectives here in the country. What is the message the IMF has for this new government going forward? And what sort of structural and administrative reforms is the IMF calling for from the new government going forward?

MS. KOZACK: So, on Sri Lanka, I'm going to be very brief because we have a team currently in the field on Sri Lanka. They are currently in Colombo conducting the third review under Sri Lanka's economic reform program that is supported by the IMF. We expect the team to wrap up the mission and they will hold a press conference on November 23rd. So, I'm going to refer you to the findings of the team at that time.

QUESTIONER: In the last statement on the sixth review of EFF arrangement for Ukraine, the IMF slightly improved forecast for Ukraine's GDP from 3.0 to 4 percent in comparison with the last world outlook. Could you please elaborate on what caused this change? And secondly, do you have a date of the meeting of the board's meeting on the sixth review for Ukraine?

MS. KOZACK: Any other questions on Ukraine.

QUESTIONER: Good morning, Julie. Just to follow up. So according to the IMF assessment, current assessment, what is the actual need for external financing for Ukraine on 2025 and how much of this funding will be provided or subject to be provided by the IMF directly or through IMF, but by donors? And the second question, I know it's hypothetical, but do you see any risks that the upcoming Trump administration will reconsider its support to Ukraine after January 20th?

QUESTIONER: Just a very quick question on the speed with which this particular review was conducted. I believe the last one, there was an SLA in September. I know that there's a deadline of December 1st, but just a question about sort of how fast this came through and a follow up, if I may on the earlier question. You know, is it likely that the board will approve or will meet to discuss approval for this review before the end of the year?

MS. KOZACK: Anyone online have a question on Ukraine? Okay, I don't hear anyone. All right, so maybe let me just step back. So, on November 18th, the IMF team and the Ukrainian authorities reached a staff level agreement on the sixth review of the four-year EFF. And of course, subject to approval by the IMF's Executive Board, Ukraine would have access to $1.1 billion which would bring total disbursements under the program after should the Executive Board approve to $9.8 billion. Program performance does remain strong. The authorities met all and September quantitative performance criteria and structural benchmarks. Understandings were also reached on a set of policies and reforms to sustain macroeconomic stability as the war continues.

Nonetheless, the outlook does continue to remain exceptionally uncertain. And Russia's war in Ukraine continues to take a heavy toll on Ukraine's people, economy and infrastructure. With respect to the question on growth, we did indeed, the team did indeed revise up the growth forecast. The changes represent stronger than expected out terms in the second and third quarters of this year. And it points to the continuing resilience of the economy despite very, very difficult circumstances.

With respect to the timing of the board meeting, we do expect the board to meet in the coming weeks. With respect to external financing needs. Given that there's a staff level agreement and we expect the board to meet in the coming weeks, we will be publishing around that time after the board approves. Should the board approve the next review, we will be publishing a staff report. It will include all of the details on financing needs. What I can share is that from the IMF side we are expected to disperse $2.7 in 2025. Billion. Sorry, billion dollars in 2025.

In terms of the timing of the review, I think there was nothing here unusual. The team is working very closely with the Ukrainian authorities and given the strong performance of the program, you know, the reviews are being completed per the standard schedule. And on questions about potential changes to policies, again, it would be too early and premature for me to speculate.

QUESTIONER: My question is about Spain. A few weeks ago, there were serious floods in the Valencia region, which apart from more than 200 dead, will cost millions of euros in losses. I would like to know how could such a serious tragedy affect the country's growth? Could Spain stop being the fastest growing country in the Eurozone?

MS. KOZACK: First, I do want to express our sincere condolences to Spain and the people of Spain for the devastating floods and the loss of life. In terms of the economic impact, our assessment is that the economic impact was quite localized and damage to key infrastructure, such as transport infrastructure, highways, and also damage to industry has been relatively limited.

Therefore, our preliminary assessment suggests that the impact on growth for the overall Spanish economy would be limited. And we will be in January providing our WEO update. And so, any potential impact will be contained in that WEO update. But nonetheless, I will certainly confirm that growth in Spain has been quite robust to date. So, given the limited impact, we'll provide a full update in January. Okay, let's go to Shu.

QUESTIONER: Thank you very much. Thank you very much for taking my question, and my question is on inflationary pressure at a global level. And this disinflation progress, which is quite welcome, seems to have stalled recently. What is your recommendation for central banks? Should they pause their easing cycle to deal with such inflationary pressure?

MS. KOZACK: Thanks very much for the question. So what we have seen with respect to inflation globally and certainly in many economies is a decline from a very high, relatively high level of inflation, a decline. And in many countries and regions, inflation is now at or near target. And so, that has been relatively good news for the global economy.

We do assess the monetary policies of major central banks as appropriate. In many cases that has been an easing cycle, and we do see that as the appropriate step, for example, in the US and in Europe. And we do expect central banks to continue to take a data-dependent approach to their decision making. And we see that also as appropriate.

QUESTIONER: Thank you for doing this. I have some questions about Executive Director for Russia and Syria Ksenia Yudaeva. Has she applied for a United States visa? And if so, what is the status of her application? Given her designation under US Sanctions, did the IMF play any role in supporting or facilitating a US Visa for Yudaeva in light of her appointment? And given the US sanctions on Yudaeva, is there a mechanism in place that allows her to travel to Washington for IMF related duties, or does the sanctions regime make that impossible? And if Yudaeva hasn't been granted a visa. How does the IMF plan to accommodate her participation in executive board meetings and other responsibilities? Thank you.

MS. KOZACK: Any other questions on Russia? Okay, so here's what I can share. Ms. Yudaeva was indeed elected to the IMF's executive board by a constituency of members which includes Russia. She took office on November 1st. Ms. Yudaeva represents the Russian Federation and the Syrian Arab Republic at the IMF Executive Board. She is performing her duties at the Executive Board, including participating in hybrid board discussions in line with the agreed practices for the conduct of executive board meetings.

And with respect to some of the other questions on visas, et cetera, I would refer you to the U.S. State Department. They are responsible for processing visa applications.

QUESTIONER: Last month, in October, G7 countries finalized their mechanism of providing loan to Ukraine backed by immobilized Russian assets. The White House shared information that at least $10 billion of this money will be transferred to Ukraine via arm of the World Bank. And I wonder if the IMF will in any case participate in providing partly financing to Ukraine backed by immobilized Russian assets as well. So, will there be any amount of money that the IMF will provide through itself? Thank you.

MS. KOZACK: All I can say on this question is that the modalities for the different components of the ERA initiatives are still being finalized. So, I don't have any further information that I can provide to you now. Let me go online now I see several hands raised.

QUESTIONER: Thank you for taking my questions. There are two questions that are related. Will the last two review of the current program be carried out and also what the status of negotiations with Argentina. Today we are talking of a new agreement and has Argentina requested new funds? Thank you.

MS. KOZACK: Any other questions on Argentina?

QUESTIONER: Good morning. If there was a definition on how to continue the current program and the negotiation for a new one. And given the convergence of the financial dollar and the official exchange rate, does the IMF think that the exchange rate is appreciated? And if there's any concern regarding the level of reserves.

MS. KOZACK: Anyone else in Argentina?

QUESTIONER: Yes, thank you for taking my question. The Minister of Economy, Los Caputo recently state that informal talks with the staff began to move forward on a new program and President Milei met this week with Kristalina Georgieva in the framework of G20. I wanted to know how are these talks progressing? Has Argentina made a formal request, an agreement, or is it close to doing so? And is there a new meeting planned for the next days between government officials and the staff? And what is the progress or two pending reviews of the current program with Argentina? Thank you.

QUESTIONER: Can you hear me well?

MS. KOZACK: Yes, we can hear you.

QUESTIONER: Thank you, Julie. So my question is that President Milei has said recently that the government may be able to eliminate the exchange rate restrictions, or CEPO, as we call it, in approximately five or six months if he manages to continue lowering inflation first and then lowering the crowd impact to 1 percent per month. So, will you agree on these time schedules? Thank you.

QUESETIONER: Apologize if this is reiterating my colleagues, but just the progress on the 9th and 10th reviews of Argentina. And if I could ask a question, following up on my colleague's question regarding the Russian executive director, you mentioned that she is participating in hybrid meetings. Does that mean that she is not physically in Washington for in person meetings? Just wanted to clarify that point. Thank you.

MS. KOZACK: Okay. Anything else on Argentina? So, on Argentina, let me just again step back for a moment. So the Executive Board completed the eighth review of Argentina's program on June 13th. Total disbursements under the EFF reached $41.4 billion. The authorities are now exploring the option of moving to a new fund arrangement.

I can also say that the Argentine authorities have continued to implement their economic stabilization program and the program is delivering impressive results. These key results include a sizable reduction in inflation in fiscal surpluses and improved reserve coverage. There are also nascent signs of a recovery in both economic activity and also real wages. IMF staff continue to work closely with the authorities and stand ready to support Argentina and its people in entrenching the recent gains and addressing the remaining challenges.

On the question on the exchange restrictions, what I can say is that the stabilization program has yielded better than anticipated results to date and to sustain the durability of these impressive results in terms of stability and growth. It does, of course, remain critical to continue to adopt a consistent set of policies, including on fiscal, monetary and foreign exchange areas. And of course, our team and the authorities are engaging very closely on these issues as they continue this very constructive dialogue. And, on your second question, I can just say that Ms. Yudaeva is participating remotely. Okay, I see some other hands up online.

QUESTIONER: Sure. Thanks a lot. I wanted to ask about both Kenya and cryptocurrency. In Kenya, I saw that the IMF cut the growth forecast. I wanted to specifically ask about Kenya Power and this idea of whether other firms, if it's true that the IMF is, unlike the World Bank, saying that other firms should be able to be selling power and should be deregulated.

And on crypto, I noticed Gita Gopinath tweeted about the climate impact of crypto mining. And I wanted to know whether that took into account this so called halving in Bitcoin and also the pro crypto position of the incoming US President. What comment can you make on that specifically as it relates to your view of cryptocurrency and its climate impact? Thanks a lot.

MS. KOZACK: Okay, thank you very much. Are there other questions on Kenya?

QUESTIONER: The Fund had reservations about the government's plan to take a loan from the UAE of about 1.5 billion. Is this just a DSA issue or is there something else there? And do you know anything about the status of that transaction? And also have they begun talks on a new program since the current one expires early next year? Thank you.

MS. KOZACK: Okay, thank you. Any other questions on Kenya? I think I saw a hand online go up.

QUESTIONER: Julie, I have a question on cryptocurrency.

MS. KOZACK: Okay, so go ahead on the crypto question.

QUESTIONER: Great. Just a follow up to what also my colleague asked. The G20 summit in Brazil was just held. Has there been a follow up since the last New Delhi summit on the FSB IMF synthesis paper? And do you see any challenge with the stance that IMF and FSB had taken then because of the current President's view on crypto?

MS. KOZACK: Okay, very good. If no other questions on these two topics, let me start with Kenya. So on Kenya, the IMF executive board concluded the seventh and eighth reviews of the ECF and EFF Blended Program on October 30th, as well as the review of the RSF. This allowed a disbursement of $606 million and brought total disbursements to about $3.1 billion under the programs.

Maybe just to add that Kenya's situation does reflect again broader challenges facing many countries in the region. And the policymakers in Kenya like in much of the region, do face a complex balancing act between pressing spending needs for priority areas, including social programs, health and education, managing the rising burden of public debt and boosting domestic revenues.

With respect to the more specific questions, on the question on the UAE loan, we're not going to comment on the specific discussions that the authorities are having with their bilateral creditors. What I can say is that given that Kenya does have... that we assess Kenya to have a high risk of debt distress, any new borrowing should be considered within the context of a comprehensive fiscal strategy to reduce debt vulnerabilities while also addressing the recent and emerging fiscal challenges. And with respect to next steps, I don't have any update at the moment, but we will keep you posted once we have more to share.

And then on the questions on cryptocurrencies and digital money, what I can say is that the IMF has been active in analyzing the policy implications of crypto assets as well as digital money more broadly. There was a status report on the implementation of the crypto Asset Policy roadmap and this was published in October and it was a joint IMF FSB document. For the IMF, for us, what we're doing is, you know, we are helping our member countries as they deal with regulatory and other policy issues related to cryptocurrencies and that includes policy approaches that are related to taxation, but also capital flows. And so, what we are ultimately trying to do in helping our member countries is to look at both the risks, but also help ensure that there are policies in place to deal and address those risks.

So let me now I'm looking here online.

QUESTIONER: Julie. Thank you. Ghana had its 3rd review with the staff in October. I would want to know when the board would meet or approve and is there any impediment that will stop the Fund’s board from approving the fourth tranche for Ghana? I also would want to know, considering the fact that recently the country has been seeing some spikes in inflation and exchange rate ahead of the elections next month, what would be the recommendations of the Fund to government considering how the implementation has been so far?

And finally, I would also want to know, would the Fund recommend that Ghana goes to the capital market anytime soon? Thank you.

MS. KOZACK: Okay, any other questions on Ghana? All right, so on October 4th, IMF staff and the Ghanaian authorities reached staff level agreement on economic policies and reforms for the third review of the ECF arrangement. Once the review is approved or sorry, is completed by the IMF's executive board, Ghana would have access to about $360 million in terms of disbursement. We are working, our staff are working toward a board meeting in early December and will provide additional details on the precise date when we have them.

What I can say in addition is that the program performance has been good. There has been in particular remarkable progress on debt restructuring. Economic growth in the first half of 2024 exceeded our expectations, exceeded our projections. Inflation has declined and the fiscal and external positions have shown marked improvement. Looking ahead, what will be important for Ghana will be continued implementation of the policy and reform agendas, especially given the difficult situation that many countries in the region and globally face. And it remains essential to fully restore macroeconomic stability and debt sustainability.

And we will, of course, have further updates on Ghana when we release the staff report, when we publish the staff report after the board meeting takes place. And we are just about out of time. I see one online. So, you will have the last question.

QUESTIONER: My questions are specific questions. First of all, inflation. And this goes back to a question my colleague regarding the potential impact of a trade war, should the incoming president of the United States instigate or renew basically. What recommendations do you have or the IMF have for countries within the Caribbean region who are significant importers of commercial products, food supplies from the United States? They have significant dependence [inaudible].

Secondly, more specifically countries and neighbors. Can IMF elaborate on its recommendations for tax reforms and how these tax reforms can potentially assist in bringing in additional revenues for a small island state like St. Kitts and Nevis? And finally, this is going over to Trinidad. There's a FOREX issue, foreign exchange issue. What's the IMF's position on that?

MS. KOZACK: Okay, thanks very much. So, on your first question, again, it's early days. I am -- and what we will do is we will assess policies as they are fleshed out and that will include, of course, an assessment for countries you know in all of our membership. With respect to the question, the specific question on St. Kitts and the tax reform strategy, what I can share is that our staff have recommended a comprehensive tax reform to make the tax system for St. Kitts, to make the tax system more growth friendly and equitable and also to reduce dependence on CBI (Citizenship by Investment) revenue.

St. Kitts and Nevis would benefit from a more progressive tax system and the elimination of distortions that are created by certain tax concessions. And the goal there would be to enhance the equity and economic efficiency of the tax system. And we will come back to you bilaterally on your question on Trinidad. I don't have anything, any update right here. We'll get back to you bilaterally.

And so, with that, I'm going to bring this briefing to an end. Thank you very much for coming. It was a pleasure to see everyone. As usual, the briefing is embargoed until 11:00 a.m. Eastern Time. The transcripts will be available on the website IMF.org and in case of clarifications or additional queries, please do reach out to my colleagues in the media center. Thank you all. And I also want to wish everyone a very happy Thanksgiving.